Compliance Alert

OIG Calls on CMS to Recover Phlebotomy Travel Allowance Overpayments

If your lab bills Medicare for phlebotomy travel allowances, a Medicare Administrative Contractor (MAC) claims audit may be in your future. The threat stems from a new Office of Inspector General (OIG) report citing MACs for paying travel allowances for lab test claims that didn’t meet Medicare medically necessary criteria and wondering aloud whether this might not be a widespread problem that the Centers for Medicare & Medicaid Services (CMS) needs to crack down on.

Billing & Coding of Phlebotomy Travel Allowances

Medicare pays a specimen collection fee when it’s medically necessary for a clinical lab technician or other trained personnel (referred to collectively as “technicians”) to draw a specimen for a test. If the technician travels to a nursing home or a homebound patient’s residence for phlebotomy services (or to collect a specimen via catheterization), Medicare also pays a phlebotomy travel allowance covering transportation and personnel expenses. Labs are supposed to use one of two Healthcare Common Procedure Coding System (HCPCS) codes for phlebotomy travel allowances:

  • HCPCS P9603, if the average round trip to a patient’s home or nursing home is farther than 20 miles, paid on a mileage per trip basis; or
  • HCPCS P9604, if the average round trip is less than or equal to 20 miles, paid on a flat rate per trip basis.

Under either code, when one trip is made for specimen draws or pickups from multiple patients (e.g., at a nursing home), the travel payment component is prorated based on the number of Medicare and non-Medicare patients on that trip. All draws and pickups are included in the proration, and the prorated phlebotomy travel allowance is billed on behalf of each Medicare patient.

OIG Auditors Find Phlebotomy Travel Allowance Overpayments

Overpayment of phlebotomy travel allowances has become a target for OIG audit. In October 2018, the agency issued a report citing Professional Clinical Laboratory, Inc., for “generally” failing to comply with Medicare billing rules for such travel allowances. In previous audits, the agency found improper payments of phlebotomy travel allowances by two MACs for lab tests performed from Jan. 1, 2015, through Dec. 31, 2016. The auditors attributed part of the blame to CMS for its “unclear or conflicting” guidance to providers on how to bill for these allowances, particularly the prorating rules.

The new report circles back to take a closer look at the earlier audits, identify the source of overbilling and determine whether CMS and MACs had made any progress in cleaning up the problem. Those previous audits covered 753,410 paid claim lines, totaling $16.4 million, paid by the two MACs for phlebotomy travel allowances, all under HCPCS code P9603. Of the 202 sampled paid claims the OIG reviewed, only 93 complied with Medicare guidance; the other 109 did not for one or more reasons related to incorrect prorated mileage, incorrect payment rates, and inadequate documentation. On the basis of the sample results, the OIG estimated that the two MACs paid providers a combined $2.7 million in phlebotomy travel allowance payments that didn’t comply with Medicare guidance.

Having accomplished part one of the mission, the auditors circled back with CMS in June 2020 to determine if they had made any progress in fixing the guidance problems that might have been behind the improper billing. The answer turned out to be no. CMS hadn’t even begun the notice and comment rulemaking process necessary to clarify provider guidance related to prorating mileage on claims for phlebotomy travel allowances or issue further guidance, the auditors reported.

OIG to CMS: Collect the Overpayments & Fix the Problem

The OIG gave CMS three recommendations:

  • Work with the MACs to educate providers about the documentation requirements for phlebotomy travel allowances;
  • Instruct the MACs to identify and adjust any paid claims that incorrectly used the previous year’s rate; and
  • Issue regulations related to prorating of phlebotomy travel allowances.

CMS accepted all three recommendations, while cautioning that the new regulations the OIG wants will have to go through the notice and comment rulemaking. However, CMS did solicit comments on current specimen collection fees and travel allowance policies, including its methodology for calculating the travel allowance, as part of the calendar year 2022 Physician Fee Schedule Proposed Rule.


The OIG thinks that CMS and MACs have been turning a blind eye to potential overbilling of phlebotomy travel allowances. And now CMS is taking the issue seriously. The good news is that the consensus seems to be that any overbilling problems that exist are the result not of lab abuse but confusing rules and absence of guidance; the bad news is that CMS has called on the MACs to identify previous overpayments and get labs to pay them back.


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